People looking to cash in on artificial intelligence growth might want to skip the pricey American stocks and head to Asia instead, according to a Singapore-based investment firm.
Saxo Markets says US technology companies have gotten too expensive. Charu Chanana, who runs investment strategy at Saxo’s Singapore office, thinks Asian markets are the smarter bet right now for the same tech trend.
“Asia offers a cheaper, more earnings-anchored route into the same megatrend,” Chanana wrote. She pointed out that about 70 percent of the world’s chipmaking happens there, plus 90 percent of AI memory production. Taiwan, Korea, and Japan handle nearly all the advanced packaging work too.
The numbers tell the story. The S&P 500 Information Technology Index is trading at almost 30 times what it’s expected to earn next year. The MSCI Asia Pacific Information Technology Index? Just 17 times, based on Bloomberg data.
US tech stocks are getting uncomfortably high
In late September, Nvidia said it would pump as much as $100 billion into OpenAI. The cash would help the AI startup construct data centers big enough to power a major city. OpenAI, in turn, agreed to buy millions of Nvidia chips for those same facilities. People quickly noticed how circular that looked.
In October, OpenAI cut another similar deal, this time with Advanced Micro Devices Inc., which competes with Nvidia. We’re talking tens of billions of dollars worth of AMD chips. OpenAI is set to become one of AMD’s largest shareholders through the partnership.
Nobody’s ever spent this much money this fast on anything quite like this. Companies are throwing huge sums at a technology that, for all its buzz, hasn’t really proven it can make money yet. Most of these investments trace back to the same two players, Nvidia and OpenAI.
Asian AI firms well-positioned in infrastructure supply chain
All these recent deals have people more concerned about this increasingly messy web of business arrangements. Critics think these linked-up transactions might be artificially keeping the trillion-dollar AI boom alive. What happens affects everything: debt markets, stock markets, real estate, energy, and so on.
Chanana admits Asian AI companies aren’t immune to global economic troubles. But she says they’ve got clearer earnings potential since so much of the money going into AI infrastructure flows straight into Asian supply chains.
“The physical build-out of AI infrastructure, chips, servers, data centres, continues at full speed, and much of that is happening in Asia,” she said.
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